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Support with R&D tax incentives

Evelyn Partners collaborate with clients to optimise their R&D tax relief.

We can help you gain maximum efficiency and value from the latest R&D tax incentives.

In an ever-changing world the need to be innovative and forward-thinking has been recognised across businesses and governments alike. The UK Government’s goal is to increase Research and Development (R&D) spending from 1.7% to 2.4% of GDP by 2027, supported by generous incentives for companies that invest in innovation.

Following a long period of relative stability, recent years have seen significant and frequent changes to the R&D regimes and future reforms are amongst the current government’s priorities for their economic policy.

This increased focus on the R&D regime has also led to a proportional increase in HMRC’s scrutiny of SME and RDEC claim submissions, as such it is crucial that companies consult with reputable and knowledgeable advisors in preparing these claims.

Business tax

How do R&D tax incentives work?

Activities that advance the overall knowledge or capability in a field of science or technology, while overcoming scientific or technological uncertainties, may qualify for R&D relief.

  • From small to medium sized enterprises

    R&D Tax relief can reduce corporation tax liability or result in a payable tax credit. The benefit can range from 25%-33% of the qualifying expenditure identified (up to 1 April 2023), following changes to the SME rates announced in the Spring Budget 2023, this benefit is likely to be in the range of 16.34% - 27% for expenditure onwards of 1 April 2023, however in practice the benefit could be outside this range as well subject to R&D intensity, company’s profit position and other tax factors.

  • For large companies

    The R&D Expenditure Credit (RDEC) is an above-the-line taxable credit of 13% for expenditure up to 1 April 2023 and 20% for all expenditure incurred thereafter, which can either reduce a company's tax bill or allow it to claim a tax credit.

What sets us apart

We are not just tax consultants, we are trained engineers, scientists, accountants and software specialists. Evelyn Partners has brought together the market’s most specialised and diverse R&D advisory team. We do not compartmentalise our roles. Our specialists are well rounded in both the technical and financial aspects of R&D tax incentive claims, providing you with maximum value and helping you throughout the claim process.

How we help

  • We give real-time eligibility assessments and tracking of technical and financial information
  • We expand the boundaries of R&D beyond limited traditional scopes
  • We use technology to integrate R&D into established processes and provide you with detailed, data-driven analytics on our bespoke portal
  • We mitigate risks by identifying them early and forecast the benefit generated to plan cashflow accordingly
  • We assist companies in establishing and growing a culture of innovation by helping them identify, promote, and reward innovative activities
  • We advise businesses on how to reinvest and fund R&D
  • We collate and present data intelligently to improve its accessibility and usability to inform commercial decisions

As active members of HMRC’s R&D Communication Forum, we regularly liaise directly with HMRC’s key stakeholders on policy, legislation and technical matters.

Our approach

We streamline your R&D claim, ensuring that you maximise your return while minimising risk. We scrutinise all aspects of a company’s operations ensuring that all R&D expenditure is accounted for while maintaining minimum disruptions to your usual business operations. See our approach here

Our services include:

  • Feasibility assessments
  • High-level R&D reviews
  • Full R&D claim preparation
  • Real-time project tracking
  • Training and contract reviews

Like our clients, we continually strive to be innovative. Our client’s needs are as diverse as the industries in which they operate. Every claim is individually tailored for the client.

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Frequently asked questions about R&D tax incentives

What costs can we claim for R&D?

Businesses may claim revenue-based expenditure for staff costs, utilities, consumables, software licences and some third-party expenses. For accounting periods starting on or after 1 April 2023, claimants may also include expenditure incurred on cloud computing and data licences. Relief cannot be claimed on items of a capital nature, such as the purchase of plant and machinery, although R&D capital allowances may be available. Development costs capitalised as intangible assets may potentially be eligible to the extent they are revenue in nature for R&D tax purposes.

What are the potential benefits when making a R&D claim?

The amount of the benefit and the way it is calculated differs depending on the size of your company. Large companies can receive a 13% credit of eligible expenditure (20% for expenditure incurred after 1 April 2023). Small to Medium Enterprises (SMEs) receive an enhanced deduction that can be cashed out if the company makes a loss. This benefit can range from 24.7% to 33.35% of the qualifying expenditure identified (between 18.6% to 27% from 1 April 2023).

Depending on the company’s size and taxable profit position, R&D tax credits can be paid as:

  • A corporation tax refund
  • A cash credit
  • An enhanced deduction to carry forward against future profits

What is the R&D claim process?

R&D tax relief is claimed within the company tax return. In order to claim these costs, the business must prove the eligibility of the associated activities. We assist in the preparation of a report detailing how the eligibility criteria have been met, including:

  • Advancements sought
  • Uncertainties faced
  • How these uncertainties were overcome
  • Why the knowledge was not readily deducible by competent professionals

This report will be submitted to HMRC alongside your CT return, in addition to HMRC’s additional information form for claims made after 1 August 2023.

How far back can we make a claim for R&D Tax Credits?

Because R&D tax relief is claimed through a company tax return, companies have two years after the end of their financial year to submit an R&D claim. A company year-end 31 December 2022, for example, would have until 31 December 2024 to make an amendment to claim R&D relief.

What if we have paid someone else to perform R&D activities for us?

An SME can generally claim for 65% of the payments made to unconnected parties. Special rules apply to scenarios where the parties are connected.

Subcontracted R&D expenditure is generally not allowable for large companies under the RDEC scheme.

Determining whether costs relate to subcontracting of R&D or the provision of workers can be a complex area and can be depended on the working relationship with 3rd parties and contractual terms. It is worth speaking to one of our R&D Incentives Advisory team members regarding eligibility of third-party costs for RDEC claims.

Can overseas costs or activities be included?

There is no specific geographical restriction on R&D tax credits; the location of the activities does not affect eligibility as of the present date. However, the government is considering restrictions to overseas costs for companies whose accounting periods begin on or after 1 April 2024.

These restrictions could mean that R&D incentives can only be claimed for activities carried out in the UK, or where workers are paid through a UK payroll, unless there are material factors such as environment or regulatory requirements that mean those activities must take place overseas. Until these restrictions are implemented, there is currently potential to include expenditure on overseas activities carried out by staff of the UK entity or third-party workers provided those costs are recognised in the UK entity’s accounts.